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WASHINGTON (2/11/10)-- The Senate Banking Committee postponed a subcommittee hearing planned for yesterday during which current and former regulators were expected to weigh in on financial systemic risk. The hearing was meant to study ways to better equip financial regulators to oversee systemic risks posed by large, complex companies, products, and activities On the House side, the Financial Services Committee postponed all hearings scheduled this week due to the heavy snow and blizzard conditions, The District of Columbia and some outlying districts announced just after 10 a.m. that plowing services were suspended until further notice because of the dangers posed by blizzard conditions, including high winds.’ The committee had scheduled a Wednesday hearing on the Federal Reserve’s strategy for exiting from extraordinary lending and monetary policies implemented to combat the financial crisis and support economic activity. Federal Reserve Board Chairman Ben Bernanke did release his prepared testimony (see Inside Washington). Also cancelled was a joint hearing with the Small Business Committee on small business and commercial real estate lending in local markets. New dates for the postponed session have not been announced.

VIENNA, Va. (2/11/10)--There is a new Bank Secrecy Act (BSA) rule on the books, one that expands the list of law enforcement agencies that can submit 314(a) information requests to credit unions and other financial institutions. The rule, effective last week, permits foreign law enforcement agencies, and state and local law enforcement agencies to utilize Section 314 (a) requests. Section 314 (a) of the USA PATRIOT Act gives FinCEN the authority to request that a financial institution search its records to determine if the institution has maintained accounts for, or engaged in transactions with, certain individuals or entities suspected of terrorism or money laundering. The new rule also clarifies that FinCEN, on its own behalf and on behalf of other appropriate components of the U.S. Department of the Treasury, has authority to submit such requests. In a Federal Register document, FinCEN declared its modification of the information-sharing rules is part of Treasury’s “continuing effort to increase the efficiency and effectiveness of its anti-money laundering and counter-terrorist financing policies.” For details, use the resource link below.

* WASHINGTON (2/11/10)—Although the House Financial Services Committee hearing scheduled for Feb. 10 was postponed because of a blizzard that engulfed the Washington, D.C. region, Federal Reserve Board Chairman Ben Bernanke still released his prepared testimony that, in part, previewed what would be the first interest-rate adjustment in more than a year. He also detailed several other steps that might be used to tighten credit.(Bloomberg.com, Feb. 10) Bernanke’s written statement said the Fed may raise the discount rate “before long” as part of the “normalization” of Fed lending. The Fed leader also reiterated a message sent at a recent Federal Open Market Committee meeting--that low rates are warranted “for an extended period.” Bernanke, who just this month started his second four-year term as Fed chairman, said he and fellow policymakers are preparing—at some point--to remove unprecedented monetary stimulus as the U.S. economy is forecast to grow at the fastest pace since 2006...

ALEXANDRIA, Va. (2/11/10)—Closely following the U.S. Treasury Department’s announcement of an initiative intended to enable low low-income credit unions (LICUs), banks and thrifts to increase lending in low-income areas, the National Credit Union Administration (NCUA) Tuesday approved by notational vote an interim final rule regarding use of secondary capital by LICUs. Last week Treasury announced the Community Development Capital (CDC) Program under which it plans to set aside up to $1 billion in Troubled Asset Relief Program (TARP) funds for use by Community Development Financial Institutions (CDFIs). Under the Treasury plan, CDFI-designated credit unions would be able to borrow as much as 3.5% of their total assets over an eight-year period. The interim rule changes NCUA rules concerning redemption of secondary capital by LICUs to facilitate the credit unions’ participation in the administration’s initiative. The new regulation permits, with approval of an NCUA Regional Director, redemption of all or part of government-funded secondary capital along with its matching secondary capital at any time after it has been on deposit for two years. Prior to the NCUA’s action, LICUs were limited with respect to the percentage of secondary capital they could redeem prior to maturation. The NCUA announcement noted that the amended rule also allows LICUs to redeem secondary capital accepted under the CDC Program before interest rates on program secondary capital escalate to 9% over the last five years to maturity. And the amended rule changes the loss distribution procedures applicable to secondary capital by making CDC Program secondary capital senior to any required matching secondary capital. NCUA Chairman Debbie Matz urged, “The time is now for eligible credit unions to utilize this additional capital tool and give consumers greater access to mainstream financial services." The interim final rule will have a 30-day comment period. When the Treasury program was unveiled, Credit Union National Association (CUNA) President/CEO Dan Mica said that while CUNA appreciates the Treasury's announcement, CUNA "continues to contend that the most effective way to help many more credit unions help the economy is by giving credit unions greater capacity to make business loans." "Doing so – through legislation raising the amount of loans credit unions can make in business loans to 25% of total assets--would inject more than $10 billion into the economy and create 108,000 new jobs in the first year. There is no public policy reason to deny credit unions this, while at the same time giving banks--who are not lending -- $30 billion as an enticement to do what credit unions are already doing, and are willing to do more of," he added.

WASHINGTON (2/11/10)—Assistant Treasury Secretary for Financial Institutions Michael Barr is scheduled to address the Credit Union National Association’s (CUNA’s) Governmental Affairs Conference (GAC) on Tuesday morning, Feb. 23. As Assistant Secretary for Financial Institutions, Barr is responsible for developing and coordinating Treasury's policies on legislative and regulatory issues affecting financial institutions. Barr previously served as Treasury Secretary Robert E. Rubin's Special Assistant, as Deputy Assistant Secretary of the Treasury, as Special Advisor to President William J. Clinton, as a special advisor and counselor on the policy planning staff at the U.S. State Department. Barr joins an already high-voltage GAC lineup that includes key financial regulators and top credit union regulators. Among the featured speakers scheduled for the conference, to be held in Washington, D.C> from Feb. 21-25, are:

Also featured are former Federal Reserve Chairman Alan Greenspan and Richard Phillips, captain of the Maersk Alabama, which was hijacked by Somali pirates in 2009, and former congressman and current host of MSNBC's Morning Joe, Joe Scarborough, will debate politics and the economy with presidential candidate and former Democratic National Committee Chairman Howard Dean. The GAC will kick off with a CUNA Council-sponsored concert by the World Classic Rockers, featuring member of Santana, Journey, Boston, Steppenwolf, Toto and Lynyrd Skynyrd. Use the resource link below for more 2010 GAC information.